Who will upgrade the telecom foundation of the Internet?

A conference report on the IP transition.

Although readers of this blog know quite well the role that the Internet can play in our lives, we may forget that its most promising contributions — telemedicine, the smart electrical grid, distance education, etc. — depend on a rock-solid and speedy telecommunications network, and therefore that relatively few people can actually take advantage of the shining future the Internet offers.

Last week, I attended a conference on the IP transition in Boston, one of a series being held around the country. While we tussled with the problems of reliability and competition, one urgent question loomed over the conference: who will actually make advances happen?

What’s at stake and why bids are coming in so low

It’s not hard to tally up the promise of fast, reliable Internet connections. Popular futures include:

Hooking up rural patients with health care experts in major health centers for diagnosis and consultation

Urgent information updates during a disaster, to aid both victims and responders

I could go on and on, but already one can see the outline of the problem: how do we get there? Who is going to actually create a telecom structure that enables everyone (not just a few privileged affluent residents of big cities) to do these things?

Costs are high, but the payoff is worthwhile. Ultimately, the applications I listed will lower the costs of the services they replace or improve life enough to justify an investment many times over. Rural areas — where investment is currently hardest to get — could probably benefit the most from the services because the Internet would give them access to resources that more centrally located people can walk or drive to.

The problem is that none of the likely players can seize the initiative. Let’s look at each one:

Telecom and cable companies

The upgrading of facilities is mostly in their hands right now, but they can’t see beyond the first item in the previous list. Distributing TV and movies is a familiar business, but they don’t know how to extract value from any of the other applications. In fact, most of the benefits of the other services go to people at the endpoints, not to the owners of the network. This has been a sore point with the telecom companies ever since the Internet took off, and spurs them on constant attempts to hold Internet users hostage and shake them down for more cash.

Given the limitations of the telecom and cable business models, it’s no surprise they’ve rolled out fiber in the areas they want and are actually de-investing in many other geographic areas. Hurricane Sandy brought this to public consciousness, but the problem has actually been mounting in rural areas for some time.

Angela Kronenberg of COMPTEL, an industry association of competitive communications companies, pointed out that it’s hard to make a business case for broadband in many parts of the United States. We have a funny demographic: we’re not as densely populated as the Netherlands or South Korea (both famous for blazingly fast Internet service), nor as concentrated as Canada and Australia, where it’s feasible to spend a lot of money getting service to the few remote users outside major population centers. There’s no easy way to reach everybody in the US.

Governments

Although governments subsidize network construction in many ways — half a dozen subsidies were reeled off by keynote speaker Cameron Kerry, former Acting Secretary of the Department of Commerce — such stimuli can only nudge the upgrade process along, not control it completely. Government funding has certainly enabled plenty of big projects (Internet access is often compared to the highway system, for instance), but it tends to go toward familiar technologies that the government finds safe, and therefore misses opportunities for radical disruption. It’s no coincidence that these safe, familiar technologies are provided by established companies with lobbyists all over DC.

As an example of how help can come from unusual sources, Sharon Gillett mentioned on her panel the use of unlicensed spectrum by small, rural ISPs to deliver Internet to areas that otherwise had only dial-up access. The FCC ruling that opened up “white space” spectrum in the TV band to such use has greatly empowered these mavericks.

Individual consumers

Although we are the ultimate beneficiaries of new technology (and will ultimately pay for it somehow, through fees or taxes) hardly anyone can plunk down the cash for it in advance: the vision is too murky and the reward too far down the road. John Burke, Commissioner of the Vermont Public Service Board, flatly said that consumers choose the phone service almost entirely on the basis of price and don’t really find out its reliability and features until later.

Basically, consumers can’t bet that all the pieces of the IP transition will fall in place during their lifetimes, and rolling out services one consumer at a time is incredibly inefficient.

Internet companies

Google Fiber came up once or twice at the conference, but their initiatives are just a proof of concept. Even if Google became the lynchpin it wants to be in our lives, it would not have enough funds to wire the world.

What’s the way forward, then? I find it in community efforts, which I’ll explore at the end of this article.

Practiced dance steps

Few of the insights in this article came up directly in the Boston conference. The panelists were old hands who had crossed each other’s paths repeatedly, gliding between companies, regulatory agencies, and academia for decades. At the conference, they pulled their punches and hid their agendas under platitudes. The few controversies I saw on stage seemed to be launched for entertainment purposes, distracting from the real issues.

From what I could see, the audience of about 75 people came almost entirely from the telecom industry. I saw just one representative of what you might call the new Internet industries (Microsoft strategist Sharon Gillett, who went to that company after an august regulatory career) and two people who represent the public interest outside of regulatory agencies (speaker Harold Feld of Public Knowledge and Fred Goldstein of Interisle Consulting Group).

Can I get through to you?

Everyone knows that Internet technologies, such as voice over IP, are less reliable than plain old telephone service, but few realize how soon reliability of any sort will be a thing of the past. When a telecom company signs you up for a fancy new fiber connection, you are no longer connected to a power source at the telephone company’s central office. Instead, you get a battery that can last eight hours in case of a power failure. A local power failure may let you stay in contact with outsiders if the nearby mobile phone towers stay up, but a larger failure will take out everything.

These issues have a big impact on public safety, a concern raised at the beginning of the conference by Gregory Bialecki in his role as a Massachusetts official, and repeated by many others during the day.

There are ways around the new unreliability through redundant networks, as Feld pointed out during his panel. But the public and regulators must take a stand for reliability, as the post-Sandy victims have done. The issue in that case was whether a community could be served by wireless connections. At this point, they just don’t deliver either the reliability or the bandwidth that modern consumers need.

Mark Reilly of Comcast claimed at the conference that 94% of American consumers now have access to at least one broadband provider. I’m suspicious of this statistic because the telecom and cable companies have a very weak definition of “broadband” and may be including mobile phones in the count. Meanwhile, we face the possibility of a whole new digital divide consisting of people relegated to wireless service, on top of the old digital divide involving dial-up access.

We’ll take that market if you’re not interested

In a healthy market, at least three companies would be racing to roll out new services at affordable prices, but every new product or service must provide a migration path from the old ones it hopes to replace. Nowhere is this more true than in networks because their whole purpose is to let you reach other people. Competition in telecom has been a battle cry since the first work on the law that became the 1996 Telecom Act (and which many speakers at the conference say needs an upgrade).

Most of the 20th century accustomed people to thinking of telecom as a boring, predictable utility business, the kind that “little old ladies” bought stock in. The Telecom Act was supposed to knock the Bell companies out of that model and turn them into fierce innovators with a bunch of other competitors. Some people actually want to reverse the process and essentially nationalize the telecom infrastructure, but that would put innovation at risk.

The Telecom Act, especially as interpreted later by the FCC, fumbled the chance to enforce competition. According to Goldstein, the FCC decided that a duopoly (baby Bells and cable companies) were enough competition.

The nail in the coffin may have been the FCC ruling that any new fiber providing IP service was exempt from the requirements for interconnection. The sleight of hand that the FCC used to make this switch was a redefinition of the Internet: they conflated the use of IP on the carrier layer with the bits traveling around above, which most people think of as “the Internet.” But the industry and the FCC had a bevy of arguments (including the looser regulation of cable companies, now full-fledged competitors of the incumbent telecom companies), so the ruling stands. The issue then got mixed in with a number of other controversies involving competition and control on the Internet, often muddled together under the term “network neutrality.”

Ironically, one of the selling points that helps maintain a competitive company, such as Granite Telecom, is reselling existing copper. Many small businesses find that the advantages of fiber are outweighed by the costs, which may include expensive quality-of-service upgrades (such as MPLS), new handsets to handle VoIP, and rewiring the whole office. Thus, Senior Vice President Sam Kline announced at the conference that Granite Telecom is adding a thousand new copper POTS lines every day.

This reinforces the point I made earlier about depending on consumers to drive change. The calculus that leads small businesses to stick with copper may be dangerous in the long run. Besides lost opportunities, it means sticking with a technology that is aging and decaying by the year. Most of the staff (known familiarly as Bellheads) who designed, built, and maintain the old POTS network are retiring, and the phone companies don’t want to bear the increasing costs of maintenance, so reliability is likely to decline. Kline said he would like to find a way to make fiber more attractive, but the benefits are still vaporware.

At this point, the major companies and the smaller competing ones are both cherry picking in different ways. The big guys are upgrading very selectively and even giving up on some areas, whereas the small companies look for niches, as Granite Telecom has. If universal service is to become a reality, a whole different actor must step up to the podium.

A beautiful day in the neighborhood

One hope for change is through municipal and regional government bodies, linked to local citizen groups who know where the need for service is. Freenets, which go back to 1984, drew on local volunteers to provide free Internet access to everyone with a dial-up line, and mesh networks have powered similar efforts in Catalonia and elsewhere. In the 1990s, a number of towns in the US started creating their own networks, usually because they had been left off the list of areas that telecom companies wanted to upgrade.

Despite legal initiatives by the telecom companies to squelch municipal networks, they are gradually catching on. The logistics involve quite a bit of compromise (often, a commercial vendor builds and runs the network, contracting with the city to do so), but many town managers swear that advantages in public safety and staff communications make the investment worthwhile.

The limited regulations that cities have over cable companies (a control that sometimes is taken away) is a crude instrument, like a potter trying to manipulate clay with tongs. To craft a beautiful work, you need to get your hands right on the material. Ideally, citizens would design their own future. The creation of networks should involve companies and local governments, but also the direct input of citizens.

National governments and international bodies still have roles to play. Burke pointed out that public safety issues, such as 911 service, can’t be fixed by the market, and developing nations have very little fiber infrastructure. So, we need large-scale projects to achieve universal access.

Several speakers also lauded state regulators as the most effective centers to handle customer complaints, but I think the IP transition will be increasingly a group effort at the local level.

Back to school

Education emerged at the conference as one of the key responsibilities that companies and governments share. The transition to digital TV was accompanied by a massive education budget, but in my home town, there are still people confused by it. And it’s a minuscule issue compared to the task of going to fiber, wireless, and IP services.

I had my own chance to join the educational effort on the evening following the conference. Friends from Western Massachusetts phoned me because they were holding a service for an elderly man who had died. They lacked the traditional 10 Jews (the minyan) required by Jewish law to say the prayer for the deceased, and asked me to Skype in. I told them that remote participation would not satisfy the law, but they seemed to feel better if I did it. So I said, “If Skype will satisfy you, why can’t I just participate by phone? It’s the same network.” See, FCC? I’m doing my part.